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Is there a Halachic directive with regards to severance pay? By Dayan Baruch Meir Levine
Q: After being a teacher for over 20 years at a local elementary school, I will be leaving at the end of this year. Baruch Hashem, the administration has been financially very supportive over the years despite the hardships they faced. However, they do not seem to be offering me any sort of severance pay or pension plan, nor is there any mention of one in my contract. Would there be any Halachic basis for me to request some sort of financial “package” upon my retirement?
A: Strictly speaking, there is no requirement in Halacha for an employer to offer any sort of compensation to an employee at the termination of his employment, beyond what is included in the contract. This would be so, regardless if the termination is initiated by the employee or the employer. While the torah does obligate a master to give an extra payment to his Jewish slave upon being set free, which is the Mitzvah of Ha’anaka, this is only limited to slaves and not standard workers (although, at times you may have felt like one!).
Nevertheless, the Sefer HaHinuch[1] writes that one should heed to the underlying factor of this halacha and apply it to the standard worker as well. Therefore, he says, when one’s employee takes leave, he should reward him “severance pay” from that which he was blessed by Hashem. Although this act would be one of Lifnim MiShurat HaDin – beyond the letter of the law, some Poskim[2] maintain that since the concept of Lifnim MiShurat HaDin is derived from the Pasuk: “V’Asita HaYashar V’Hatov”[3] – “you shall practice what is just and good”, it is in fact incumbent on one to act as such. According to this view, it would be within Bet Din’s realm to enforce some sort of severance payment.
In some industries or regions, it is in fact the accepted practice for companies to offer what is termed “severance pay” if and when they layoff an employee. In an industry where this is indeed so, it would become obligatory on any employer to offer this payment, even if it were not stated in the employment contract[4].
However, the entire concept of severance pay, would only apply if you were leaving your job because the school is no longer offering you the opportunity to continue it. It is in such an instance where many employers feel it only right, and indeed Lifnim MiShurat HaDin so dictates, to offer some sort of compensation to the employee for not offering to renew his contract. If, however, the school is still offering you your job, and rather it is you taking the initiative of leaving, whether due to retirement or any other reason, then the concept of Lifnim MiShurat HaDin would not apply[5], and neither could we draw parallel from any accepted practice.
In such an instance the only compensation an employer would offer is a pension plan, but such a plan would have to be built into the employment contract as there doesn’t seem to be any established practice of offering such compensation in the absence of a specific agreement.
Nevertheless, with regard to rebbeim and Yeshiva principals specifically, there does seem to be an established practice among schools, to offer them, upon their leave, one month’s payment per year of service, regardless of their basis for the termination. This practice, referred to as “Hodesh LaShana”, was initiated primarily by Torah U’Mesorah in the mid-20th century to partially make up for the inadequate “nest egg” a rebbe usually has (or does not have!) at the time of his retirement. As such, a Bet Din may require your school to follow this practice.
Sources:
[1] סוף מצוה תפ”ב.
[2] רמ”א (סי’ י”ב ס”ב) בשם יש חולקין, והש”ך (שם) בשם הב”ח.
[3] דברים ו’, י”ח
[4] עיין במנח”י ח”ו סי’ קס”ז שכתב דכן הוא המנהג בא”י, ושעפי”ז מחייבים הבתי דינים שם בתשלומין זו.
[5] מנ”י בתשובה הנ”ל.